Exxon expects profits to dip in 2nd quarter
Exxon Mobil is warning investors that its second quarter earnings could take a hit from weaker chemical margins and lower natural gas prices offsetting gains from refining and crude oil production, suggesting profits could be flat from last quarter and down from the same time last year.
The Irving company is scheduled to hold an earnings call on Aug. 2, according to its website, but it provided a preview of factors that could affect its second quarter earnings in a filing with the U.S. Securities and Exchange Commission Monday.
Exxon's stock fell about 1 percent Tuesday to close at $75.72.
After years of strong profits and multibillion dollar expansions, the petrochemical industry is slowing and possibly heading for a downturn, analysts say. Lower chemical prices, the U.S.-China trade war, falling car sales and a weakening economy in Europe is dinging profits across the industry. Overall average operating margins — which measure profits before taxes and interest — fell 22 percent among 52 chemical companies in the first quarter this year compared to the same period last year, according to the global research consultancy Accenture.
Exxon Mobil estimated that its chemical margins could lower its second quarter earnings by $100 million to $300 million from the first quarter. Maintenance work at some chemical plants factored into its earnings, but the company did not elaborate.
Exxon Mobil's chemical businesses posted profits of $518 million in the first quarter, above half the earnings from the same period a year earlier.
The decline in chemical earn
ings could outweigh other gains Exxon expects in the second quarter. The company said its refining margins could improve its earnings by as much as $400 million compared to the first quarter. Exxon's refining business swung to $256 million loss in the first quarter from profits of o $940 million the same time last year.
On the production side, Exxon said it expects improved crude prices to lift its second-quarter profit by $400 million to $600 million, althouugh lower natural gas prices could reduce profits by the about the same amount.
Overall Exxon profits plunged nearly 50 percent in the first quarter as 2019 started with lower oil prices and the nation's biggest energy company upped its spending in the booming Permian Basin.